Russian plane crash may halve Sharm al Sheikh's tourism income

SHARM AL-SHEIKH, Egypt (Reuters) - The fallout from the crash of a Russian passenger plane in Egypt's Sinai Peninsula could slash tourism income from Sharm al-Sheikh by half, the head of the region's travel agents' association said on Tuesday.

Several airlines have suspended flights to the Red Sea resort since the Oct. 31 crash, which investigators and Western governments believe was likely to have been caused by a bomb. Thousands of Russian and British tourists have been flown home.

"Losing 40 percent of our clients will lead to losing around 50 percent of the tourism income in Sharm al-Sheikh and South Sinai," Guevara el-Gafy, chairman of the South Sinai Travel Agents Association, told Reuters.

According to the World Travel and Tourism Council, tourism directly accounts for around 6 percent of Egypt’s economy and supports more than 1.3 million jobs. Sharm al-Sheikh accounts for about 70 percent of visits by Britons, a major tourism market for Egypt.

Speaking in his family-owned Gafy Resort, where portraits of Egyptian President Abdel Fattah al-Sisi adorn the walls, Gafy said the industry had originally expected a 30 percent increase in tourists this winter season.

"The problem is that the plane crash occurred at the beginning of the season... Sharm al-Sheikh and South Sinai are winter destinations," Gafy said.

About 10 percent of bookings were canceled on the day of the crash, Gafy said, and the number jumped to around 40 percent after Britain and Russia suspended flights into Sharm al-Sheikh.

Tourism was just about to pick up, he said, after five years of political turmoil that saw two Egyptian presidents ousted and battered the economy.

Last year, 9.9 million tourists visited Egypt, a far cry from the 14.7 million who visited in 2010, the year before Arab uprisings convulsed the Middle East.

Gafy said the industry cannot respond to the crisis by lowering prices, having already done so several times.

"We are getting out of five years of depression. Already our prices had been decreased to the minimum that most of the hotels and the industry can survive."

"HELPING THE TERRORISTS"

He said the British government had suspended flights prematurely, adding that even if the Airbus 321 is confirmed to have been brought down by a bomb, suspending flights would only help those who engineered the attack.

"Just banning Egypt and stopping the business is only helping the terrorists complete what they started," said Gafy. "The tourism industry is very fragile."

Mass closures of small businesses like restaurants and cafes were possible.

"Can you imagine if the tourists start to come back, and as they are walking around the shops close down around them? It is going to be very sad. For us and for the tourists."

Gafy, 43, who is seeking election to Egypt's parliament in two weeks, said he hoped that the Egyptian government would address Britain and Russia's airport security concerns.

The son of a retired general who moved to Sharm al-Sheikh in 1984, shortly after Israel withdrew from the Sinai Peninsula under a peace treaty with Egypt, Gafy said not all tourists had been deterred.

"We are losing a big amount by losing the British and the Russians," he said. "But we have eight countries still sending their clients because they understand Egypt is increasing security at the airport and is taking fast action."